Glossary
Forced-sale value
Also called: mortgagee sale value
Forced-sale value is a valuer's estimate of what a property might sell for under restricted marketing conditions, such as a shortened campaign following a lender enforcing its security. It is usually lower than market value.
An example
A lender considering a loan on a specialised property asks the valuer to also report a forced-sale value, to understand what it might recover if it had to sell quickly.
Why it matters
Some lenders size loans by reference to forced-sale value for higher-risk or illiquid assets. It explains why loans on specialised property can be smaller than a market valuation suggests.
Points to check
Ask whether the lender uses forced-sale value or market value to size the loan, because it changes how much you can borrow. Check the marketing period the valuer assumed. Forced-sale value can matter if the loan goes into default, since a mortgagee sale may achieve less than market value. Understanding the gap between the two values shows how much buffer the lender believes it needs.